SoftBank Says Dish’s Sprint Bid Is Full of ‘Wishful’ Numbers

SoftBank Corp. President Masayoshi Son, Japan’s second-richest man, said in October he targeted Sprint because it can challenge Verizon Wireless and AT&T Inc.’s dominance of the U.S. mobile-phone industry. Photographer: Kiyoshi Ota/Bloomberg

May 10 (Bloomberg) -- SoftBank Corp. Chief Executive
Officer Masayoshi Son renewed his attacks on Dish Network Corp.,
his rival suitor for Sprint Nextel Corp., saying the satellite
company would be a poor match for a wireless carrier.

“It doesn’t help to bring a football player to a baseball
team,” Son said in an interview. “There’s no synergy between
satellite and mobile.”

The SoftBank executive, whose company owns the Fukuoka
SoftBank Hawks baseball team, was in New York for meetings with
Sprint investors, trying to build support for his $20.1 billion
bid for the company. Sprint, the third-largest U.S. carrier, had
agreed to SoftBank’s price in October, only to see Dish counter
with an unsolicited $25.5 billion offer last month.

Son, Japan’s second-richest person, said his bid provides
more tangible cost benefits because SoftBank and Sprint could
pool their purchases of wireless equipment and handsets. The
transaction will save more than $2 billion a year on average
from 2014 to 2017, reaching a run rate of $3 billion annually
after that, SoftBank said this week in a presentation. The
merged companies will also be able to cut Sprint’s capital
spending by 32 percent to 36 percent, SoftBank said.

For the past nine months SoftBank has been negotiating with
vendors on prices and delivery schedules to provide Sprint’s
board with a “very solid” cost-savings estimate, said Son, 55.
Because Dish hasn’t done due diligence, its synergy numbers are
“wishful,” he said.

Holding Tight

SoftBank, Japan’s third-largest wireless carrier, doesn’t
plan to raise its bid, which remains on track for a shareholder
vote in June, Son said. He expects it to be approved. Sprint,
based in Overland Park, Kansas, declined to comment.

Completing the transaction next month would let Sprint
start improving its network sooner, rather than having to wait
months for the Dish deal to come together, Son said.

Son is squaring off against fellow billionaire Charlie
Ergen, the chairman of Englewood, Colorado-based Dish, who
points to the higher dollar value of his offer and his own
synergy estimates. Dish has said it could produce $11 billion in
cost savings because the merging companies could reduce overlap
in marketing staff and other business units.

“Obviously I think we have a better offer in front of
Sprint,” Ergen said on a conference call yesterday following
the company’s earnings report. “I believe that based on what
I’ve seen in the last few days from SoftBank presentations and
the synergies that they believe are out there.”

Trading Quarterbacks

Dish also owns wireless spectrum, the airwaves that let
mobile devices make calls and connect to the Internet. The
satellite company would use its spectrum -- currently dormant --
to bolster Sprint’s network. Dish spent years acquiring the
airwaves, part of Ergen’s plan to use the wireless market to
offset slowing growth in satellite TV. He estimates that the
spectrum is worth $10 billion or more in cash if it were sold.

“Ultimately spectrum is what you need,” said Ergen, 60.
If Sprint doesn’t get those airwaves through Dish, one of its
competitors might buy them, he said.

“They have a chance to put our spectrum in their column,”
Ergen said. “If they don’t, that spectrum is going to compete
in some form or fashion with Sprint, right? And then the only
thing I can tell you is when a football team has two great
quarterbacks, they’ll never trade a quarterback to somebody in
their same division because they’d have to play them.”

Son argued that Dish’s spectrum isn’t valuable because it
doesn’t work with current devices. The Federal Communications
Commission also would have to sign off on its use by Sprint. The
airwave licenses were initially approved for a new entrant to
the wireless market, meaning there’s no guarantee that Sprint
could even use them, Son said.

Manhattan Cow

“It’s like getting the gift of a cow in a Manhattan
apartment,” he said. “The cost of keeping the cow is
expensive.”

Sprint’s board also is concerned about Dish’s ability to
obtain the financing to complete the transaction, as well as the
debt that would be placed on the merged company, a person
familiar with the deliberations said this week. Sprint’s
directors have questioned how the promised cost savings would be
produced as well, the person said.

Dish has lined up Jefferies Group LLC to help it finance
the proposed acquisition, people with knowledge of the matter
said yesterday.

Sprint’s Comeback

SoftBank, meanwhile, is providing $8 billion in cash to
Sprint, an infusion that could help accelerate its turnaround
plan. The U.S. carrier is angling to return to profitability
after the $36 billion purchase of Nextel Communications Inc. in
2005 saddled the company with debt and led to tens of billions
of dollars in losses.

Sprint shares were little changed at $7.36 at the close in
New York today. They have climbed 30 percent this year, putting
them above the price offered by SoftBank or Dish, suggesting
that investors are expecting a bidding war.

Ergen said yesterday that if SoftBank really expects to
save $3 billion a year in operating synergies, the company
should raise its bid.

SoftBank will probably pay “quite a bit more for Sprint
than we have offered so far,” Ergen said. “Both Dish and
SoftBank see tremendous value there. Shareholders are going to
be the winners, and who knows where this goes?”